Tuesday, June 25, 2013

Germany Too Dominant, According to Harris Poll

(European Politicians, Robin Hood Tax/Flickr)
A recent Financial Times/Harris poll finds that adults in the five largest European countries have mixed feeelings on their countries' influence in the European Union. For example, half of Germans (50%) believe their country's influence in the EU is about right, but this is definitely not an opinion shared by those in the other four countries, as almost half of Britons (48%), the majority of French adults (56%) and over four in five Italians (82%) and Spaniards (88%) say Germany's influence is too strong. Not a very surprising result: if your own economy is in the doldrums and you feel threatened from everywhere, then the easiest is to blame 'smartest' kid in class. See press release for full summary of this poll.

Meredith Whitney's New Book Fate of the States

Bank Analyst Meredith Whitney, known for her previous correct negative forecast of Citibank and her still incorrect forecast of the collapse of U.S. municpal bonds, has now come out with a new book, Fate of the States, The New Geography of American Prosperity  In this book she presents the case for how the housing boom and bust, and the fiscal decisions by municipalities wil drive strategic population shifts in the U.S., from states such as California and Florida to the American heartland (Texas, Indiana and North Dakota.) From someone who has been quite wrong about the municipal bond crisis, one shouldn't expect too much from this book in terms of its predictive value. I recommend reading the following two reviews first before deciding whether it's worth buying this book:



A return to the American heartland by Nicole Bullock in the Financial Times, who says: "....Other analysts are inching towards the idea that defaults may no longer be as taboo as they once were. But Whitney has not been vindicated yet. She may have intended her book as an apologia, but she is calling attention to yet another bold call. Only this time, in her words, it involves "bigger and more important' issues." and Meredith Whitney's Migration by municipal bond analyst Cate Long from Reuters, who says: "..The best comment about Whitney's book that I read was from fiscal analyst Kil Huh: "You can get her book for $19 (just reduced.) At least she's not charging $50k this time for making stuff up..."










Thursday, June 20, 2013

OECD Finds Immigration No Burden on Public Finances



Several publications, including The Economist and The Financial Times reported on a recent OECD report, International Migration Outlook 2013, which states the costs & benefits of immigration on their respective 33 member states in terms of costs to their public finances. The OECD’s overall conclusion is that “migration is neither a significant gain nor drain for the public purse” with an average positive contribution of .30% of GDP in 2007-09.” For example, Germany was the worst off with -1.13% of GDP, the U.S. with 0.03%, the Netherlands with 0.40%, and Luxembourg experienced the highest positive impact with a contribution of 2.02% by migrants on the public finances, basically consisting of the net impact of taxes, VAT, welfare, education and health costs. The Economist acknowldeges that this is “not the lastword on this issue”, but “does show that the extremes of the debate are just that – extremes.”  The Financial Times has nothing else to add than repeating the reports's claim that "Immigration into the world’s largest economies has a negligible effect on the public finances of host countries...."
  
This reporting by these two publications highlights the conclusion that immigration does not cause a major burden to the recipient economies. Well, that's interesting to know, but why not look at the OECD report's conclusions from a different perspective: apparently immigration does not contribute significantly to the migrant importing countries' public finances. If that's the case, why should the world's largest economies even bother with allowing immigration on a large scale (by 2011, foreign born residents of OECD countries reached 12.5% of the population) - with the exception of ad hoc needed specialized workers or political refugees - ? I would maintain that it would be better for the migrants exporting and importing countries and the state of the world, if their respective economies would do well and support their local populations, rather than force people to leave their countries out of lack of choice and opportunity. I find it striking that neither The Financial Times nor The Economist, generally publications exemplary of intellectual curiosity, do not question the conventional thinking about immigration, or raise questions about the OECD's interpretation of its findings.

Tuesday, June 18, 2013

Politics & Economics Ahead of the G-8 Meeting: confusing, insincere or plain politics?

(European Politicians, Robin Hood Tax/Flickr)
Ahead of the group of 8 industrial nations meeting in Northern Island, Jose Manuel Barroso, the European Commission president talked  to the New York Times, European Commission President Criticizes Opposition to Globalization.  While reading this article, I started wondering how come so many of the current political leaders, dealing with the biggest economic challenges in their lifetimes, are not able or willing to be honest about the direction they want to follow and flexible when confronted with evidence against their initial policies. Are they insincere, not that smart, or is this plain politics?

One of the  issues to be discussed at the G-8 meeting is a new trade agreement, a trans-Atlantic accord between the U.S. and the European Union. Barroso specifically criticized France's insistence on its l'exception culturelle, whereby cultural products are treated differently than other commercial products (see also my previous post European Backlash Against Amazon.) In this case, "the French government had successfully argued that Europe's movie and television industry will be excluded from the trade negotiations in order to protect the region's cultural diversity."

“It’s part of this anti-globalization agenda that I consider completely reactionary,” Mr. Barroso said, adding that he believed in protecting cultural diversity but not in sealing off Europe. “Some say they belong to the left, but in fact they are culturally extremely reactionary.”


What mr. Barroso calls reactionary, someone else might call conservative or even progressive for that matter. No matter what,  Barroso, like many other politicians, seems to choose policies out of confusion or insincerity. He is obviously supporting globalization, the same globalization that has caused the downfall of his fellow European countries, such as Greece and Cyprus, not to mention that has brought his own country, Portugal, to the brink of bankruptcy. 

The other issue to be discussed at this G-8 is the state of the economy and the supposed calls from Washington for a retreat from austerity measures. Barroso says:


Are Changing America's Demographics Relevant to Europe?

(European Politicians, Robin Hood Tax/Flickr)
The Financial Times published yesterday an editorial, Changing America about the changing demographics of America and its consequences for the Republic Party and also for Europe. It said:

"America’s white population is falling. Last year for the first time, the number of deaths of non-Hispanic whites in the US exceeded births. And the majority of births are now non-white.....America's rapidly changing population is a wake-up call both for Republicans, who face oblivion unless they change as a party, and to Europe which must grasp the implications of a US that will no longer be of majority European descent. Europe should take a cue from the US about the benefits of being more open.... 

You can read the full editorial at the FT site, but I really could not follow this editorial apparently written by editors holed up in their Manhattan apartments, London offices or Oxbridge study lounges. I decided to write the following to the editor of The Financial Times:

Friday, June 7, 2013

European Backlash Against Amazon (part 2)

(goXunuReviews/Flickr)
I ended my previous post European Backlash Against Amazon, by saying the following about French - and possibly British - governments'  attempts to stop Amazon from "destroying" local brick & mortar stores through supposed abuse of their power:

"My sympathy goes to the brick & mortar stores, but my free market instinct doesn't see the solution in French or British government support. If Amazon is breaking any laws, it needs to be stopped from doing so. If Amazon is abusing its power, that too should be addressed. But short of that, every smart bookseller or entrepreneur needs to come up with innovative responses to the attacks from the online retailers: maybe if one of them finds a sustainable model, others can follow suit."

I just found a few comments by well-regarded pur-sang free-market blogger, Mish Shedlock. This is what he says in his June 4 post 'France Considers Ban on Free Shipping by Amazon, a 'Destroyer of Bookshops"; Prepare for Economic Collapse in Europe. '

" It's easy to spot the problem. France does not need and cannot afford a culture minister whose obvious goal is to stop the spread of technology and preserve culture as she sees fit. But France is France. So when does this fool announce a tax on Kindle or campaign to bring back the horse and buggy?

and he continues


Thursday, June 6, 2013

European Backlash Against Amazon

(goXunuReviews/Flickr)
 "Everyone has had enough of  
Amazon, which by dumping practices, slashes prices to get a foothold in markets only to raise them as soon as they have established a virtual monopoly," the French minister of culture, Aurélie Filippetti, said in a speech to booksellers, according to the British newspaper The Guardian which reported on how, after the French government pledged financial support to its private brick & mortar bookstores against the "destroyer of bookshops" (aka Amazon), now the British Booksellers Association is calling for its government also to  support the booksellers against Amazon.

Two things stand out here: first, Amazon's overpowering market position (in the U.S. Amazon captured 31% of 2012 book expenditures of approximately $27 billion; the total by US online retailers accounted for 43% up from 39% in 2011; bookstore chains went down from 26% in 2011 to 19% ; and independent bookstores stayed at 6%;) is hardly generating any backlash in the U.S., definitely not from consumers who appear quite satisfied with Amazon's products and service, and only sporadic from booksellers. Secondly,...........

Wall Street Behind Bars

TaxCredit/Flickr
MarketWatch has interviewed five Wall Street felons, including Bernie Madoff and Sam Antar, former Chief Financial Officer of Crazy Eddie, for a special report about their crimes and their views on what they all seem to see as unfair financial markets. MarketWatch found the results from its special report discouraging.

"MarketWatch found that insider trading may be one of the most common crimes on Wall Street and one of the least prosecuted. .............It discovered that the problem for retail investors goes far beyond a failure of regulators to identify insider-trading violations. The financial criminals we spoke with said that not only do many investors routinely skirt insider-trading laws, but the explosion of computerized high-speed trading in recent years has made the situation even more unfair for the retail investor..........Bottom line: The markets aren’t fair for retail investors."

Following a few quotes by these white-collar criminals. First, Bernie Madoff, serving 150 years for orchestrating the biggest Ponzi scheme in history on the position of the individual investor:


Dutch American Financial Ties Throughout History

Serge Melki/Wikimedia Commons
It's 404 years ago since the Dutch East India Company financed the journey of Henry Hudson resulting in the discovery of New York. Now in 2013 the Dutch still play an important role in cross-border investmenst with the U.S. In his column in the Dutch newspaper De TelegraafCees Vermaas, CEO of NYSE Euronext Amsterdam (NYSE Euronext is the first global equities exchange formed in 2007 when the New York Stock Exchange merged with Euronext) describes his visit this week to New York, joined by the other European sister-exchanges, as part of the Pan-European Days. During those days, 16 leading Dutch companies and others listed on the European sister-exchanges are meeting with U.S. institutional investors, offering them their latest business insights and also participating in a seminar about the European capital markets. Mr Maas makes a number of interesting observations about the importance of Dutch-US ties throughout the ages. As his Telegraaf column is in Dutch, let me highlight here some of those remarks:
 - the U.S. invest 24% of its total European investments in the Netherlands and are the largest investor in the Netherlands with an annual investment of $52 billion